Who records?

15 Replies

Just bought a note from a company online. Who records the new lien holder with  the county? Me, or the seller?

-Paul

There is no norm.  Either one of you can record the assignment.  Get or give a digital copy to/from the other party once the document is returned with it's stamp. 

I always take responsibility for recording the assignment so I'm sure it is recorded. There are companies like CSC who will handle this for you, you just need to send them the notarized assignment with instructions. 

Bob

Medium rcm circleBob Malecki, Resolution Capital Management | 360.850.1252 | http://www.rcm.company | Podcast Guest on Show #211

Like @Bob Malecki , I like to take the responsibility myself so that I know it's done, but the other party can certainly do it as well, which could save you the filing fee. It's really whatever you and the seller agree to.

Agree with Bob and Mark.  One thing to consider is that not everyone records their assignments, so there could be a number of "dry" unrecorded assignments prior to yours. 

A title search can show you which assignments are recorded so far.  It is important to get these recorded and they MUST be recorded in order or it will cause real problems if you need to foreclose for some reason.  Don't rely on the county clerks to get this right.  You can use an attorney to get this done or you can deal with the county directly.  If you go the direct route, you should indicate clearly the order of recording for each unrecorded assignment you send them.  I have found that clipping a piece of paper to each which says "Record First", "Record Second" etc. works well.  Also, you must send the original assignments, not a copy.  Because I don't want these to be lost I use FedEx and include a second FedEx envelope complete with label for them to return the recorded assignments. 

Medium sure dark blue   dark grayMike Hartzog, SureMark Capital Group

Mike,   

   I was provided the original note and mortgage. I was also given two different assignments that were recorded. Are you saying there could be additional assignments that I wasn't provided. If not recorded, how would I know about them?

- Paul

@Paul Murch  

Hi Paul - You should be able to see the complete chain of assignment from the originator of the mortgage on through to yourself or your entity.  Sometimes transfer is done with an endorsement stamp on an existing assignment document, so you may not have an original assignment document for each transfer.  The same thing holds with note allonges (which are not recorded).  You want to see the complete chain.

You should have reviewed and O&E report (limited title search) as part of your due diligence.  Generally you can get updates on these from the company which produced the O&E for a reasonable fee.  This will show you which assignments have been recorded and that can be compared to the chain you see in your hard copy collateral to show you what still needs to be recorded if it is unclear. 

Mike

Medium sure dark blue   dark grayMike Hartzog, SureMark Capital Group

@Paul Murch  @Dion DePaoli  

  buying notes is like buying the asset open an escrow have the title company give you a title commitment prepare the assignment with your escrow instructions, also make sure you get the alonge if its required.. then the title company records and insures your interest.

We used to use 104.1 endorsements but I think those don't exist anymore.

You may want to check With Dion he is offering a very reasonably priced Due Diligence package to make sure you are getting what you bargained for.. Especially if your new to buying notes.. It can be a pretty complicated transaction and its easy to get fouled up if you don't really know what your doing.

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222

Make sure you get all the paperwork from the seller, and you can go direct to the recorder's office and record it in person you don't need a lawyer or title company to do that for you.



Joe Gore

Receiving the original note and mortgage will give you priority over other claims regardless of priority of perfection of those assignments.  In this case, it does not sound like there is any huge issue with the AOM chain.  Again, receiving possession of the originals gives priority to the holder over other claimants, if they arise.  That doesn't mean AOM's are not important, they just will not stop the world from turning if it has to.  An AOM can not be endorsed to someone, it does not function like that.  At the least expect an instrument clean from the Seller to the Buyer assigning the loan.  No third party to that.

The Promissory Note should be endorsed "Pay to the Order of ________" where the blank is the OP.  Allonges were designed to be used upon the lack of room for an endorsement to be made in the instrument (bottom or margins).  It is better to get an endorsement in the instrument than to get an allonge, although both can work.  There are some legal concerns coming down the pipe in some states affecting Allonges.  A matter for another thread.  

Paul in your response you mention you received two AOM's that are already recorded.  It's not clear who the parties on those instruments are.  Hopefully you are one of the parties on one of the instruments with the Seller who sold you the loan.  What Mike is telling you is true, you should be able to write out the lineage of the loan from the Lender in the instrument to Buyer/Seller 1 and Buyer/Seller 2 (your Seller) to you.  So you should expect one of the two AOMs you received to assign from your Seller to You.  They already recorded it so there is nothing to do.  

If neither of those instruments contain you and your seller.  Then there would be cause for concern that who sold you the instrument did not have rights to sell.  However, since you have been given possession of the originals, it does not seem all that likely there is any issues to really worry about.  If you think you have an issue, post and we can give you some feedback.

Jay, typically there is no escrow in a whole loan trade of an existing mortgage.  I have never used a title company to settle a loan trade.  (funding a purchase loan is different)  While that endorsement does offer piece of mind for priority in the assignment, in general we do not look to those unless there are some serious complications in ownership of the collateral.  I have often seen the inclusion of title companies with some folks trying to make trades happen usually to try and create some legitimacy - those are typically the trades we avoid.  It's usually the first red flag.  Thanks for the plug.


Thanks for the input and feedback @Dion DePaoli  @Mike Hartzog  @Jay Hinrichs @Joe Gore 

One of the AOM's is from the Seller to me. I just need to get that one recorded now. I am in Hawaii and the property is Southern California. Should i go with a title company or find an attorney? 

The three AOMs match up with the three allonge attached to the original note. 

Being new, I probably didn't do as much due diligence as I should have. All part of the learning process. Looking at a "Profile Report" from my preferred Title company is now raising more questions. There is a Sale listed from the Borrower to his wife for $0 in January 2010. He filed for CH 7 bankruptcy later that year and the note was discharged. (I knew about the Ch. 7 part already) Is it possible that he transferred the property to his wife for $0 and then filed for bankruptcy? Can you do that? Transferred in a divorce perhaps?

    Also, all the paperwork has him and his wife as joint tenants and both as the borrowers. The final allonge from the Seller has just his name. His credit report is the only one the Seller provided to me. What do you make of that?

I appreciate all the help.

All you need to do is call the County Recorders Office and get a price to record your instrument, just the AOM, send the AOM and a check in to the recorder.  If the AOM is already prepared, there is nothing for you to do.  Different counties have different format rules.  Sometimes you can ask or they are on the website.  If your version is not correct, they will send it back to you unrecorded to be fixed. Since your Seller already made it, they might know the format and all is good. (most likely the case)

The man had his wife join him in title.  That's expected since they are man and wife.  The property was not hidden from Bankruptcy, the note was discharged.  The man joined title with his wife in Joint Tenants which is the type of title we would expect them to have.   All of that is OK and proper.

The Deed of Trust likely only has one Borrower, the man.  The wife did not execute the Deed of Trust at the time of origination.  The wife likely didn't exist at the time of origination either since we have the wife joining title in 2010.  As such, the Mortgagee would not have permission to pull credit on the wife since she is not an obligated Borrower.  She is a non-borrowing spouse.  

There is nothing that sounds out of order with any of that here.  However, all of this begs a question I have to ask.  If you don't know all of this stuff, which no offense, is the very basics, what on earth did you due diligence on?    That is more of a rhetorical question than anything else, I suppose.  There is ironic humor when you ask about using an attorney to handle mailing in a pre-prepared AOM (simply put in mail and send) but get what seems like no advice on the file as it pertains to title, credit, bankruptcy and origination.  That, I don't think is doing "more" due diligence, I think many folks confuse that idea.  You can't do more of something that you don't understand as you likely were not doing it to begin with.  Just something to think about.  Like I said, the above details sound fine.

Thank you @Dion DePaoli  . The wife is an original signing borrower on the note and is on the original deed with her husband as Joint Tenants. Five years later is when the Grant Deed is recorded from him to her. That was the confusing part. 

My due diligence was an investigation of the property, value, and borrowers credit. Being new, I didn't know what other questions I needed to be asking. Now I know some more. Despite plenty of reading and listening to lectures, there is no replacement for experiential learning. Everybody is a beginner at some point. 

Hi Paul - Is this note performing or non-performing?  I am assuming performing since a credit report was provided.

Medium sure dark blue   dark grayMike Hartzog, SureMark Capital Group

It is a non-performing note. Looking to contact the borrower and make it performing.

Something there does not jive.  If they were Joint Tenants at origination.  Then it would seem the latest deed gives his interest to her.  So she becomes the Sole Tenant.  Perhaps a divorce.  

It doesn't follow that they are Joint then a Deed to still be Joint.  There is no point in the deed, they were joint to begin with.